Short sale offer approved (buyer) but then appraisal came in lower, now what?

                    Hi everyone.   I need all the advice I can get.   I live in CT (wanted to mention the state).  Back in July, my husband and I put an offer on a short sale condo that we love.   Waited, and waited......We are first time homebuyers.

 

                    FINALLY, citimortgage approves our offer the second week of Nov.   Condo docs ordered, atty orders title search, then last week, our lender did ANOTHER appraisal, the appraisal came in 7,000 LOWER than what citimortgage approved a few weeks earlier.   We have tried contesting the appraisal, but no luck.   

 

                     Our attorney, and agent have both tried to be in contact with citi to see if the lower price will be accepted.   There has been no response.   We were about to cancel, as we have waited, but then my agent says  the listing agent says there should be a response within 3-4 weeks.    This was AFTER we were told we would know something by this Tuesday.    If it is only 3-4 weeks we have to wait, we can hang on, but we were also told by our attorney that it could take just as long for an answer this time as it did going in (5 months).    We would obviously love to be able to buy the place, but also want to know if it is time to move on if citi does not approve our offer.    So my questions are....

 

                   In a short sale when the buyer's appraisal comes in lower than what they bank approved, is there any hope, and also, will it take just as long to get another response?  Thank in advance for any advice.    We are getting anxious and frustrated. 

 

                       Lauren 

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There's no real way to know for sure.  It may not be Citi that's slowing down the process, the appraisal may have been sent to the investor (possibly Freddie or Fannie Mae?) to approve, and they may have stacks of files on their desks.  Keep pushing and making sure the agent is contacting the bank weekly for updates.

Hi Lauren. One solution if you are able is to just bring the difference ($7,000) to closing. Your lender will lend on the appraised the value but that doesn't mean you can't pay more for the property. Obviously this is the fastest way to get the transaction closed.

Citi MAY come down on price. The listing agent should submit a revised HUD, contract addendum lowering the price and your appraisal to Citi. Citi will then submit this to the investor. It could very well take several week to get a response.

I've had many buyers just choose to close at the higher price of they are able to.

A property has several different values. It's worth more to the short sale lender than the lender lending money on it. The SS lender is trying to limit their loss (high value). The new lender is trying to protect their investment (low value). You want to buy a home for your family (true market value).

I hope this helps.

Hi Lauren,

All the replies are good. Usually the SS Bank approves to the appraised value. So it may just be taking a little longer. Also make sure you send in an addendum to lower the offering price to the SS bank signed by Buyer and Seller.

The same thing happened to me, except the house I was buying was appraised for $20K less. I thought we were out of luck, but we hung in there. It was originally approved in early August. They went back and forth with the negotiators after that. I had to give up my concessions, which I was more than happy to do. It was approved for the appraised amount in early October, so two months after the original approval. I'm sitting in the house right now, and I love it! It was stressful for sure, but it all worked out in the end, so it definitely happens.

My advice? Hang in there!

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